Sudan 101: Could Sudan's oil resources solve its problems?

If oil revenue is concentrated on infrastructure projects in far-flung regions, such as South Sudan and Darfur, it could prevent those areas from falling back into war.

ByScott Baldauf, Staff writerApril 26, 2010

Khartoum, Sudan — Greater prosperity through an oil-driven economy has the potential to create jobs and generate revenues that would allow both north and south Sudan to mimic the relatively well-managed oil-driven economies of the Persian Gulf states such as Qatar and Dubai.

Oil revenues have already made an impact, paying for roads and bridges and hydropower dam projects that the country desperately needs.

But most experts believe that the country’s oil may cause more harm than good, increasing government corruption and perhaps even pushing the country back into war.

The bulk of Sudan’s oil lies in fields along the still-unmarked boundary between the North and the South, between the still-heavily armed Sudanese People’s Liberation Movement and the equally well-armed miltary loyal to President Omar al-Bashir.

According to most estimates, more than 70 percent of the oil reserves and more than 70 percent of the current production are inside Southern Sudan.

Under the current Comprehensive Peace Agreement, which ended the two-decade long civil war in 2005, the oil revenues from these fields are shared almost equally, with oil-rich border states of Abyei, Blue Nile, and South Kordofan sharing 2 percent of all oil revenue for themselves. The remaining 98 percent of oil revenue is shared equally between the national government and the government of Southern Sudan.

If the South votes to secede, in a referendum mandated by the CPA agreement, then each country will get 100 percent of the oil within their boundaries.